A recently resurfaced paper from a BlackRock Managing Director estimated an XRP fair value around an ambitious two-digit level.
Notably, market commentator AllInCrypto recently called the public’s attention to a 2018 paper co-authored by Robert Mitchnick, now BlackRock’s Head of Digital Assets, and Stanford economist Susan Athey.
The study, released years before the crypto market reached today’s trillion-dollar scale, was among the first structured attempts to calculate the fair value of Bitcoin and XRP. It estimated XRP’s fair value at $32.
Notably, in June 2018, Bitcoin traded near $7,000 and XRP changed hands around $0.50, the same price it traded for as recently as September 2024. Both had soared the previous year, but few analysts could explain the rally.
Details of the Report
In their report, Mitchnick and Athey approached the crypto valuation differently. Notably, instead of seeing them as stocks or commodities, they treated Bitcoin and XRP as forms of money that had two main purposes: moving value and storing wealth.
Their model estimated demand by projecting how much people would use each network for payments and how much wealth might eventually be held in the assets long term. They divided this projected demand by each asset’s supply and discounted the numbers back to present-day values using traditional finance methods.
Specifically, the framework relied on eight inputs: expected transaction volumes, average holding time before coins moved, storage demand, total supply, future issuances or locked tokens, reserve ratios, discount rates, and the years needed for adoption to stabilize.
Bitcoin and XRP Fair Values
For Bitcoin, they assumed 18.2 million coins in circulation by maturity and a 12-year adoption timeline. Meanwhile, for XRP, they worked with the full 100 billion supply, with 39.2 billion circulating at the time and the rest locked in escrow.
Notably, the report projected Bitcoin’s daily transaction volume to hit $5.6 billion to $28.2 billion by 2030. According to their estimates, if Bitcoin captured a gold-like share of global wealth, storage demand could range between $1.1 trillion and $1.6 trillion.
With a 4% discount rate, they valued Bitcoin at $45,000 to $93,000. However, after factoring in only a 30% chance of long-term success, the expected fair value dropped to $13,600 to $28,100.
However, for XRP, the model suggested even bigger potential. Specifically, they projected $190 billion to $556 billion in daily transactions by 2030 across remittances, corporate payments, and foreign exchange.
If XRP captured 15-30% of crypto’s wealth storage, that meant $1.6 trillion to $3.2 trillion in demand. Nonetheless, with an 8.5% discount rate, the model placed XRP’s fair price at $6.37 to $32.91. After assigning just a 25% chance of success, the expected value narrowed to $1.59 to $8.23.
Current State of the Market
Seven years later, the results look mixed. For one, Bitcoin now trades around $116,000, up more than 1,500% since 2018 and above the model’s expected range. On the other hand, XRP, at about $3, has risen fivefold but still falls short of the $32 success scenario.
The broader market has improved significantly as well. Notably, crypto’s total market cap has climbed to $4 trillion. Bitcoin controls 58% of this share with a $2.31 trillion valuation and $33 billion in daily trading volume. However, XRP holds 4.5% of the market, valued at $180 billion, with $4.14 billion in daily activity.
Most would argue that the U.S. SEC’s lawsuit against Ripple, which began in December 2020, contributed massively to XRP’s less impressive run.
Also, Mitchnick’s valuation focused on XRP dominating Ripple’s ODL and ODL in turn dominating global payments. This has not yet materialized, and Ripple has diluted its focus to other areas, such as stablecoins. In addition, BTC may have outperformed due to the massive demand from ETFs and treasury companies.
However, it is important to note that these were not necessarily price predictions from Mitchnick and Athey. Instead, they were estimates of the fair values of Bitcoin and XRP if the proper conditions aligned.
DisClamier: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
